Treasury, OMO Bills Yields Slide after Auctions

Treasury, OMO Bills Yields Slide after Auctions

The average yield on Nigerian government fixed interest securities instruments slid over renewed interest by local investors. Buying interest in the secondary market dragged the average yield lower by 1bp to 15.8% in the OMO segment. With successive depreciation of the local currency, the naira, and heightened inflation rate conditions, more funds have been channelled toward equity space. However, the apex bank is offering rate differential in the open market operations to attract foreign interest amidst the US dollar shortage. The Central Bank of Nigeria (CBN) recently closed an OMO bill auction worth N400 billion, according to analysts’ notes, at higher rates above Treasury bill sales. Despite this, investors’ return on naira assets remained negative due to the running inflation rate, worsened by the depreciation of the naira across FX markets. The naira depreciated by 6.5% to N850.22 at the Nigerian Autonomous Foreign Exchange Market. In the money market, the overnight lending rate expanded slightly by 2bps to 17.9%. Benchmark money market rates ascended due to moderate pressures driven by tight liquidity in the financial system.  Trading activities on Treasury bills ended mixed but with a bullish bias, as the average yield pared by 1bp to 13.3%. Across the curve, Cordros Capital said in a note that the average yield closed flat at the short and mid segments.  Yield dipped at the long (-1bp) end, following mild interest in the 345-day to maturity (-1bp) bill. Elsewhere, the proceedings in the FGN bond secondary market were bearish, as the average yield expanded by 8 basis points to 15.8%. Across the benchmark curve, Cordros Capital reported that the average yield contracted at the short (-4bps) end. Traders noted that yield bumped as investors demanded for MAR-2025 (-18bps) bond. However, yield expanded at the mid (+5bps) and long (+15bps) segments due to the sell-off of the JUN-2033 (+21bps) and JUL-2053 (+87bps) bonds, respectively.